http://www.nytimes.com/2009/04/04/your-money/04wealth.html?pagewanted=1&8dpc
April 4, 2009
WEALTH MATTERS
Who Gets Hit When the Wealthy Cut Back
By PAUL SULLIVAN
THE first stirrings of spring in Fairfield County, Conn., have sounded: the whine of the leaf blowers and the beep of dump trucks full of mulch. But this spring and summer in Fairfield, one of the wealthiest counties in the United States, is shaping up as a tough one, not just for the homeowners — many of whom work in New York — but also for the landscapers and other workers they employ.
“A lot of the industry understands its fate is tied to wealth — to real estate and the stock market,” said Bob Heffernan, executive director of the Connecticut Nursery and Landscape Association. He said the state’s industry generated $1 billion in revenue a year and employed 48,000 people.
To get a sense of the wealth in the county, consider these figures from Connecticut Expos, which organizes a high-end home show in the county. The average price of a home in Darien was $1.165 million in 2008 and in New Canaan, $1.455 million. Greenwich topped the list, with an average home price of just under $2 million.
And the people who buy that average house — 6,500 square feet on an acre or two — rely on landscapers, gardeners, pool guys and all manner of tradesmen to keep everything in shape. But many of those homeowners were Wall Street’s top earners, and their incomes and investments are down in the troubled economy. So now, they are cutting back. And when they do, the people who maintain their homes feel the brunt of it.
“You’re seeing the Wall Street guys suffer, but it’s a trickle-down effect,” said Tony Femia, who owns Femia Landscaping and Site Development.
“I have clients who are billionaires, clients who are famous, and the small guy, too — they’re all cutting back.”
Mr. Femia said he lost only two of his 80 lawn maintenance clients this season. But he said each of those clients told him they were cutting back on lawn services. As a result, he laid off half of his 30-person staff and planned to take some of his 15 trucks off the road.
“Let’s talk about all the delis who depend on my guys,” he said. “What about my insurance agent? I’ll use less trucks so that’s less money for him. What about my mechanics who depend on fixing those trucks?”
In many ways, landscapers are faring better. Most work directly for their clients, who may cut back but are not about to mow two acres themselves. Tradesmen are struggling even to get work.
Dan D’Arinzo, an electrician with a wife and three children in North Stamford, had expected to put out a banner this year celebrating 20 years in business. Instead, he is trying to get through the downturn.
“In the area where we live, with Wall Street, they’re not sure if they’re going to have a job,” he said. “They’re not going to put money into landscape lighting and generators. The money is not there.”
Two weeks ago at the Connecticut Expo’s annual home design show in Stamford, the number of exhibitors and attendees was down only 5 percent, according to Nick Curci, the company’s president. But he said vendors selling products at the highest end — particularly builders and pool companies — were struggling.
Home improvement in Fairfield County was not just for the wealthiest. Until the housing market froze last year, middle-class homeowners were taking equity out of their homes to pay for landscaping and pools. With housing prices down and equity tapped, this group’s home improvement plans could be postponed for years.
Of course, every economic dislocation comes with opportunities.
On the upside, if you have money for work around the house, now is a good time to do it. Service providers are more willing to negotiate the price, not least of all because they have their own fixed costs to cover.
Jackie Cameron, a landscape architect, said that for the first time a client — a Citigroup banker with a house in Westport — asked her to lower her rate. “At that point, I had no work, so I took 10 percent off the fee,” she said. “Price was as much a consideration for him as quality.”
The bigger the job, the bigger the reduction can be. Mr. D’Arinzo, the electrician, said he watched the overall budget of a large renovation in New Canaan drop from $1.5 million in the fall to $700,000 by spring. The portion for his electrical work dropped accordingly.
A project that was $100,000 a year ago, he said, might cost 15 to 20 percent less today.
“I had a guy, a New York City lawyer, who said to me, ‘I need an estimate for everything on some indoor lighting, and I need to sign off on it,’ ” he said. “Six months ago, he didn’t even know how much I charged.”
This may seem odd to many people, but Brid Craddock, president of the Connecticut chapter of the Association of Professional Landscape Designers, said in flush years people in Fairfield County were more concerned with speed and securing a sought-after tradesman than haggling over price.
“I’ve had a lot of clients who now want price breakouts — the patio, the lighting, the flower beds,” she said. “They want to know where their money is going. And once it’s broken out, they say, ‘Let’s not do the lighting.’ ”
In other words, do not be embarrassed to negotiate.
But the downside to this is that fixating on a bargain price could end up costing more in the long run. This is where the old adage “penny-wise and pound-foolish” comes into play.
There are two main risks from excessive bargain hunting. The obvious one is you get what you pay for, and that could be shoddy work.
The more serious issue, though, is hiring someone who is not properly insured. Every reputable landscaper or tradesmen will have liability insurance for his employees and be able to produce the certificate. But that insurance is expensive. Mr. Femia said he paid $80,000 a year to insure his workers and equipment. If his employee is hurt mowing your lawn, his insurance covers it. If, however, a worker without insurance is hurt on your property, he can sue — and end up owning your house.
There is another, less tangible cost to both negotiating prices and changing providers in a recession: the value of loyalty. The people who maintain your house are probably being hit as hard as you, if not harder than you, by the downturn.
Mr. Femia, the landscaper, said a client whose estate he has maintained for 15 years asked him to lower his hourly rate. Instead, Mr. Femia said he showed him how he could save double that on a landscaping bill that was well into the six figures.
“Once I said I couldn’t lower my hourly rate, he put it out to bid,” Mr. Femia said. “That $4 to $5 an hour means a lot to me. I’ve got guys who have been with me 20 years and make good money. Is that five bucks an hour really that much to a billionaire?”
April 4, 2009
WEALTH MATTERS
Who Gets Hit When the Wealthy Cut Back
By PAUL SULLIVAN
THE first stirrings of spring in Fairfield County, Conn., have sounded: the whine of the leaf blowers and the beep of dump trucks full of mulch. But this spring and summer in Fairfield, one of the wealthiest counties in the United States, is shaping up as a tough one, not just for the homeowners — many of whom work in New York — but also for the landscapers and other workers they employ.
“A lot of the industry understands its fate is tied to wealth — to real estate and the stock market,” said Bob Heffernan, executive director of the Connecticut Nursery and Landscape Association. He said the state’s industry generated $1 billion in revenue a year and employed 48,000 people.
To get a sense of the wealth in the county, consider these figures from Connecticut Expos, which organizes a high-end home show in the county. The average price of a home in Darien was $1.165 million in 2008 and in New Canaan, $1.455 million. Greenwich topped the list, with an average home price of just under $2 million.
And the people who buy that average house — 6,500 square feet on an acre or two — rely on landscapers, gardeners, pool guys and all manner of tradesmen to keep everything in shape. But many of those homeowners were Wall Street’s top earners, and their incomes and investments are down in the troubled economy. So now, they are cutting back. And when they do, the people who maintain their homes feel the brunt of it.
“You’re seeing the Wall Street guys suffer, but it’s a trickle-down effect,” said Tony Femia, who owns Femia Landscaping and Site Development.
“I have clients who are billionaires, clients who are famous, and the small guy, too — they’re all cutting back.”
Mr. Femia said he lost only two of his 80 lawn maintenance clients this season. But he said each of those clients told him they were cutting back on lawn services. As a result, he laid off half of his 30-person staff and planned to take some of his 15 trucks off the road.
“Let’s talk about all the delis who depend on my guys,” he said. “What about my insurance agent? I’ll use less trucks so that’s less money for him. What about my mechanics who depend on fixing those trucks?”
In many ways, landscapers are faring better. Most work directly for their clients, who may cut back but are not about to mow two acres themselves. Tradesmen are struggling even to get work.
Dan D’Arinzo, an electrician with a wife and three children in North Stamford, had expected to put out a banner this year celebrating 20 years in business. Instead, he is trying to get through the downturn.
“In the area where we live, with Wall Street, they’re not sure if they’re going to have a job,” he said. “They’re not going to put money into landscape lighting and generators. The money is not there.”
Two weeks ago at the Connecticut Expo’s annual home design show in Stamford, the number of exhibitors and attendees was down only 5 percent, according to Nick Curci, the company’s president. But he said vendors selling products at the highest end — particularly builders and pool companies — were struggling.
Home improvement in Fairfield County was not just for the wealthiest. Until the housing market froze last year, middle-class homeowners were taking equity out of their homes to pay for landscaping and pools. With housing prices down and equity tapped, this group’s home improvement plans could be postponed for years.
Of course, every economic dislocation comes with opportunities.
On the upside, if you have money for work around the house, now is a good time to do it. Service providers are more willing to negotiate the price, not least of all because they have their own fixed costs to cover.
Jackie Cameron, a landscape architect, said that for the first time a client — a Citigroup banker with a house in Westport — asked her to lower her rate. “At that point, I had no work, so I took 10 percent off the fee,” she said. “Price was as much a consideration for him as quality.”
The bigger the job, the bigger the reduction can be. Mr. D’Arinzo, the electrician, said he watched the overall budget of a large renovation in New Canaan drop from $1.5 million in the fall to $700,000 by spring. The portion for his electrical work dropped accordingly.
A project that was $100,000 a year ago, he said, might cost 15 to 20 percent less today.
“I had a guy, a New York City lawyer, who said to me, ‘I need an estimate for everything on some indoor lighting, and I need to sign off on it,’ ” he said. “Six months ago, he didn’t even know how much I charged.”
This may seem odd to many people, but Brid Craddock, president of the Connecticut chapter of the Association of Professional Landscape Designers, said in flush years people in Fairfield County were more concerned with speed and securing a sought-after tradesman than haggling over price.
“I’ve had a lot of clients who now want price breakouts — the patio, the lighting, the flower beds,” she said. “They want to know where their money is going. And once it’s broken out, they say, ‘Let’s not do the lighting.’ ”
In other words, do not be embarrassed to negotiate.
But the downside to this is that fixating on a bargain price could end up costing more in the long run. This is where the old adage “penny-wise and pound-foolish” comes into play.
There are two main risks from excessive bargain hunting. The obvious one is you get what you pay for, and that could be shoddy work.
The more serious issue, though, is hiring someone who is not properly insured. Every reputable landscaper or tradesmen will have liability insurance for his employees and be able to produce the certificate. But that insurance is expensive. Mr. Femia said he paid $80,000 a year to insure his workers and equipment. If his employee is hurt mowing your lawn, his insurance covers it. If, however, a worker without insurance is hurt on your property, he can sue — and end up owning your house.
There is another, less tangible cost to both negotiating prices and changing providers in a recession: the value of loyalty. The people who maintain your house are probably being hit as hard as you, if not harder than you, by the downturn.
Mr. Femia, the landscaper, said a client whose estate he has maintained for 15 years asked him to lower his hourly rate. Instead, Mr. Femia said he showed him how he could save double that on a landscaping bill that was well into the six figures.
“Once I said I couldn’t lower my hourly rate, he put it out to bid,” Mr. Femia said. “That $4 to $5 an hour means a lot to me. I’ve got guys who have been with me 20 years and make good money. Is that five bucks an hour really that much to a billionaire?”
